My Company

A recent article in the New York Times, "Seeking Business, States Loosen Insurance Rules" fails to distinguish between captive insurance companies owned by the parent corporation and the subsidiary insurance company formed by MetLife, The Hartford Financial, Swiss Re, Genworth Financial, and American International Group, Inc., all of which have numerous regulatory oversights to contend

On July 16th, 1978, Lisa Bergson of the New York Times interviewed me for the article, “Captive Insurers Slip Their Chains." My textbook, "The Captive Insurance Company ... An Emerging Profit Center," explained why corporations should form captive insurance companies as another risk management tool. The interview and the textbook created the captive insurance company industry.

Over these 33 years, the number of captive insurance companies has grown to
5,000. In the next three years, the number will grow to 10,000 captive insurance companies, in a global insurance setting.

A recent article in the New York Times, "Seeking Business, States Loosen Insurance Rules,"fails to distinguish between captive insurance companies
owned by the parent corporation and the subsidiary insurance company formed by
MetLife, The Hartford Financial, Swiss Re, Genworth Financial, and American
International Group, Inc., all of which have numerous regulatory oversights to contend
with.

Parent corporations, such as Verizon Communications, Inc., Major League
Baseball, and the Carlisle Companies have all set up captive insurance companies. The
reasons for these corporations to use captives are the same that I put in my textbook 30
years ago. Advantages of captive insurance companies:

Major League Baseball set up a Vermont captive called MLB Burlington
Assurance Exchange Society, which has saved $41 million since 2003, writing workers’
compensation, auto liability, umbrella liability, general liability and property insurance
coverages in their captive.

Carlisle Companies, Inc. formed their Vermont captive in 2000, called the Carlisle
Insurance Co., to mitigate and finance the risk of loss. The captive has been very
successful over the 11 years in business.

Verizon Communications, Inc. has been utilizing captive insurance companies for
their casualty, global property, patient infringement, and third party reinsurance (i.e.,
personal lines, OCIP, and handset insurance). They, along with their consultants,
develop risk transfer solutions.

Feasibility studies for a captive are required by every regulatory domicile, with a
sign off by the captive regulator.

The creation of subsidiary insurance companies by AIG (MG Reinsurance),
MetLife and Hartford Financial Services should not be confused with the growing
captive insurance company owned by U.S. corporations both public and private.

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About the Author

Andy Barile, CPCU, has been in the insurance industry for over 40 years in the United States, and his experience covers all types of insurance coverages, and all forms of insurance entities. Mr. Barile has developed all types of insurance programs, from development, to i... More